Coffee beans

Yara sells ammonia fleet to BW Gas

Apr 27, 2006
Yara and BW Gas will also enter into a partnership agreement under which BW Gas will provide shipping services that Yara has defined to be non-core. Yara is today the world's largest player in the ammonia segment, trading more than 5 million tonnes per year or one third of the global seaborne trade. The partnership will increase Yara's ability to participate in future expansions of seaborne ammonia trade and logistics optimization at the same time as BW Gas' shipping scale is being improved.
"Our shipping activities have, and will continue to represent an important competitive advantage for Yara for many years. While commercial control remains a core activity for Yara, ownership of shipping capacity is not. With BW Gas we establish a strong partnership. Their strength as the leading shipping service supplier within the LPG/ammonia segment will increase our flexibility and support our growth ambitions," says President and CEO of Yara International, Thorleif Enger.
Commenting on the deal, Jan Håkon Pettersen, Managing Director and CEO of BW Gas, says: "The partnership with Yara, the world's leading ammonia producer, is strategically important for BW Gas to reach it's goal of becoming the preferred supplier of gas transportation. The relationship will improve the utilization of our fleet and create value for our shareholders. We will at the same time renew and expand our ammonia fleet and further strengthen our position as the world's leading shipping service provider to the gas industry."
The agreement covers the following acquired ships and charter-parties:
The vessels will be time chartered by Yara with an average duration of 9 years.
The transaction is based on future freight contracts for Yara at rates that are assumed to reflect market rates. These are somewhat higher than the existing freight contracts that Yara has with different shipping companies. This is reflected in the divestment price for the ammonia-shipping portfolio. The divestment of the ammonia shipping portfolio will give Yara an immediate cash injection of USD 235 million (NOK 1,500 million), while Yara's freight costs will increase with USD 29 million (NOK 185 million) in the first years after the transaction, compared to the existing freight contracts. The transaction will create a net income for Yara of more than NOK 800 million, which is expected to be booked in second quarter 2006.
Due to Yara's strong balance sheet and strong cash flow, Yara intends to spend up to half of the cash from the sale on an extraordinary share buy-back within the 5% authorization that has been proposed to the General Meeting in May.
Yara has previously stated that it expects to pay out to the shareholders 40-45% of net income in dividends and share buy-backs as an average over the business cycle. As a result of the cash injection from the divestment of the ammonia fleet, Yara expects to exceed this level in 2006 as a percentage of the 2005 net income.
The closing of the deal is expected before the end of second quarter 2006. The agreement is subject to approval from competition authorities.
A press conference will be held at Vika Atrium (Munkedamsveien 45), Oslo
on Thursday April 27 at 11.00. President and CEO Thorleif Enger (Yara) and Managing Director and CEO Jan Håkon Pettersen (BW Gas) will attend the press conference
To download a high resolution picture go to and navigate to Newsroom/Image gallery/Fertilizer.
Torgeir Kvidal, Investor Relations
Telephone  (+47) 24 15 72 95
Cellular (+47) 91 339 832
Arne Cartridge, Media Relations
Telephone (+47) 24 15 73 01
Cellular (+47) 47 900 900
Yara International ASA is a leading chemical company that converts energy and nitrogen from the air into essential products for farmers and industrial customers. As the number one global supplier of mineral fertilizers and agronomic solutions, we help provide food for a growing world population. Our industrial product portfolio includes environmental protection agents that safeguard air and water purity and preserve food quality. Yara's global workforce of 6800 employees represents great diversity and talent enabling Yara to remain a leading performer in its industry.
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